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Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.

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Speaker 1: Along with my co host Lisa Bramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether you're at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg p m L

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Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Well,

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Speaker 1: I was reading a report from HSBC this morning that

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Speaker 1: showed that millennials expect to retire at age fifty nine,

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Speaker 1: which is two years younger than the working age average

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Speaker 1: of six one and seems rather remarkable in an era

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Speaker 1: of incredibly low benchmark yields. I want to bring in

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Speaker 1: Peter Fendler for some perspective. Peter Fendler is a principal

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Speaker 1: at Hub International New England LLLC, based in Portland, Maine,

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Speaker 1: who focuses on retirement accounts and advising people. And how

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Speaker 1: likely do you think it is that this current generation

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Speaker 1: of upcoming workers will be able to retire at age

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Speaker 1: fifty I think it's really unlikely, given the fact that

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Speaker 1: we're living longer and we're saving less than we ever have.

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Speaker 1: What's more realistic, I think seventy is the new the

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Speaker 1: new sixty five and UM, you know, we're sitting with

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Speaker 1: UH participants in retirement plans and looking at their average

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Speaker 1: account balance and trying to project forward what they should

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Speaker 1: be able to retire on. There's a pretty large disconnect

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Speaker 1: between what they have, what they need, and what they

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Speaker 1: think they need. You know, Peter, I wonder if you

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Speaker 1: could just offer people a little bit of an insight

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Speaker 1: into your business and also the changes that you have

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Speaker 1: seen in your business. I mean you UH were independent

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Speaker 1: and now you're part of Commonwealth, you know, family of

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Speaker 1: Advisers and UM and HUB International is of course made

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Speaker 1: the acquisition. What if you could just describe your role

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Speaker 1: on how it has changed over the last couple of

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Speaker 1: years and what's foremost in your mind. UM. I think

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Speaker 1: there's a lot of consolidation going on and there's going

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Speaker 1: to be a narrowing of of what we do as

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Speaker 1: retirement plan advisors under the new realm of the fiduciary

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Speaker 1: rule that's been promulgated recently. UM still in its finalization,

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Speaker 1: but assuming it it maintains its current form, there are

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Speaker 1: going to be a lot of advisors that UM make

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Speaker 1: the election to get out of this business because of

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Speaker 1: the risk. UM, I think there's going to be Uh,

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Speaker 1: we've got a conflict of interests that's inherent in the

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Speaker 1: way that our retirement plan advisory work happens right now,

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Speaker 1: where there's commission based resources and conversation formulas as well

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Speaker 1: as fee based, and the fiduciary rule really attacks the

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Speaker 1: commission based variable pay element of what's going on, and

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Speaker 1: it puts a premium on being a fee based advisor

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Speaker 1: such as ourselves. UM So to that extent, I think

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Speaker 1: with that increased liability under a commission based relationship with compensation,

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Speaker 1: you're going to see those advisors that don't want to

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Speaker 1: move to a fee base, or are not prepared to

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Speaker 1: or don't have the infrastructure to go to that direction. UM,

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Speaker 1: perhaps exit the market. Well let's let's ask a question

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Speaker 1: that might seem basic, but are so many advisors for retirement?

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Speaker 1: Are they necessary? Is it is? It is a certain

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Speaker 1: consolidation important, right, I think there is, I thinks a

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Speaker 1: great question. I think there are a lot of advisors

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Speaker 1: that have two or three plans that aren't really expert

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Speaker 1: in the retirement plan space. But um, they have a

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Speaker 1: friend that has a company and they become the advisor

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Speaker 1: just through kind of convenience and in relationship. But um,

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Speaker 1: with the fiduciary standards that are coming out now and

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Speaker 1: the attention on fiduciary capability, UM, it's it's going to

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Speaker 1: be one of those things where it gets rolled up

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Speaker 1: to people that are expert in that space. So how

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Speaker 1: small do you expect this interest try to become? In

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Speaker 1: other words, can you give us some perspective and how

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Speaker 1: big is now and how small you expect it to become?

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Speaker 1: That's a good question. I don't I really don't know

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Speaker 1: how large the advisor community is, but I think it's

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Speaker 1: reasonable to expect that there's strinkage in the in the

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Speaker 1: realm of twenty to thirty maybe that's a lot. Yeah,

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Speaker 1: I think, well, where are those assets go? I think

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Speaker 1: they will remain with advisors, but with advisors that do

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Speaker 1: a lot more of the work that are specialized in

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Speaker 1: the retirement plan space. So where is the area. Is

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Speaker 1: there a specific specialized territory where advisors are really necessary?

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Speaker 1: Uh with respect to people crafting retirement plans? I don't

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Speaker 1: think so. I think it's up and down the market.

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Speaker 1: So it's it's not specific to a certain industry. It's

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Speaker 1: not specific to a size of a company. Um, if

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Speaker 1: you are an employer and you are launching a four

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Speaker 1: one K plan or or four or three B plan

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Speaker 1: in the nonprofit space, it's a complex world and it's

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Speaker 1: not one of those things that you really want to

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Speaker 1: do for yourself. End employers or fiduciaries and they're looking

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Speaker 1: to offset that fiduciary responsibility by hiring a co fiduciary

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Speaker 1: through eight relationships which we are actually providing on the

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Speaker 1: three twenty one level. That sounds expensive. Is it getting

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Speaker 1: more expensive? Actually it's getting less expensive. Um, how much

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Speaker 1: does it cost? So that that's a really good question

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Speaker 1: and it's a complex answer. What's happening is there so

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Speaker 1: much attention on fees that that there's been a continual

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Speaker 1: compression of costs and what we're doing and within our

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Speaker 1: organization is saying, look, here is our baseline UH set

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Speaker 1: of services that where we're acting as a fiduciary at

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Speaker 1: the plan level, helping you with plan design, with fund selection,

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Speaker 1: fund monitoring, and and educational fiduciary standards those things. That's

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Speaker 1: one fee set and it's based upon our liability as

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Speaker 1: advisor UH and the side as a plan. The other is,

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Speaker 1: do you want us to act as a fiduciary for

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Speaker 1: your employees helping them with education, investment selection, one on

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Speaker 1: one advice, um, And the fee for that is really

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Speaker 1: time sensitive. How much are we doing, how how often

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Speaker 1: are we sitting with your employees? It sounds like, but

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Speaker 1: it sounds like at least that that the latter scenario

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Speaker 1: um is Uh. It is, you know, part of the

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Speaker 1: whole education process and is considered to be a positive

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Speaker 1: if you can afford it. It is And I think

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Speaker 1: employers needed time to change it from a fee space

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Speaker 1: to an investment space because what's happening in the United

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Speaker 1: States going back to Lisa's original question, is that Americans

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Speaker 1: are underfunded for retirement. We're woefully underfunded and um, we're

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Speaker 1: kind of going along going forward, and if we stay

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Speaker 1: that way and don't have enough money to retire, we won't,

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Speaker 1: which has the upstream of higher costs for employees and

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Speaker 1: employers by employees not retiring on time. Well, we'd all

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Speaker 1: like to retire on and I want to thank you

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Speaker 1: very much for helping us. Peter Findler, he is a

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Speaker 1: principal Hub International, New England. We're broadcasting live and the

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Speaker 1: Commonwealth Financial Networks twenty seventeen Retirement Symposium in Boston. Well

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Speaker 1: Oil has been on a wild ride of late. Just

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Speaker 1: days ago it was above fift dealers of barrel. Now

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Speaker 1: it's down to forty seven dollars a barrel. Despite news

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Speaker 1: that Saudi Arabia is tightening the screws on Qatar as

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Speaker 1: punishment for its ties to Iran. And I want to

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Speaker 1: bring in Javier blast who's our chief energy correspondent for

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Speaker 1: Bloomberg Intelligence talking to us. Come just set the stage

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Speaker 1: for us. Why did Saudi Arabia take these measures against Quaitar?

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Speaker 1: What exactly are the exact parameters of these measures? Well

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Speaker 1: over the last few years that the relations between Saudia,

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Speaker 1: Abbia and Catar has been strained for a number of reasons,

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Speaker 1: in part because Catar support the Muslim brother could a

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Speaker 1: movement that Saudi Arabia does not, in part because Qatar

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Speaker 1: has been trying to add some mediator between the conservative

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Speaker 1: countries in the uh in the in the goal for

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Speaker 1: the Arab conservative countries in the golf by Saudi Arabia

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Speaker 1: and on the other side Iran. And also because of

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Speaker 1: all Jasira, the Doja Base television station that Qatar controls

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Speaker 1: has been quite critical of the Saudi regime. Those disagreements

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Speaker 1: have been in crescendo over the last few months, and

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Speaker 1: they erupted into a crisis last week. And now it's

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Speaker 1: Saudi Arabia is retinally eighteen and getting several other countries

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Speaker 1: behind it, several relations between itself and and and Doha.

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Speaker 1: That is something unprecedented because Saudi Arabian and Qatar in

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Speaker 1: theory on the same side uh in the Gulf Corporation Council,

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Speaker 1: and also because both both countries are close allies of Washington.

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Speaker 1: Is a very unusual situation in the Middle East. Well,

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Speaker 1: I was just looking at some of the headlines of

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Speaker 1: the newspapers in the Middle East tier and the United

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Speaker 1: aramids quitar armed terror to spread chaos. Uh Iran is

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Speaker 1: encouraging Qatar to leave the sixth Nation Gulf Cooperation Council

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Speaker 1: and so on. And then you have also the same

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Speaker 1: kind of thing in Saudi Arabia, and the response of

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Speaker 1: the in Qatar is bark as you wish Qatar won't

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Speaker 1: change its principles. Uh isn't the United States have a

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Speaker 1: huge military presence just outside of Doha. It does and

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Speaker 1: you're absolutely right, and that's what I was emphasizing. It

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Speaker 1: is a very unusual situation in wh when you see

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Speaker 1: two Middle East nations or or one one group of

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Speaker 1: Middle East nations led by Saudia, we in the United

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Speaker 1: Arab Emidates and on one side and the other side Qatar.

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Speaker 1: Because the both sides of these confrontations have close links

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Speaker 1: with the United States. Washington has a huge military operation,

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Speaker 1: a military air base used on the Outskirs of Doga,

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Speaker 1: the Central Command that oversees all the operations in the

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Speaker 1: Middle East, and also in Afghani style, ten thousand more

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Speaker 1: than ten tho troops. Yes, they's ten thousand troops, are

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Speaker 1: huge air base and and the central Command that oversees

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Speaker 1: all the operations in the Middle East and Afghanistan, all

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Speaker 1: of that is based in Qatar. Yeah. Well, you know,

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Speaker 1: let's let's put this in perspective. Saud Saudi Arabia, Bahrain,

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Speaker 1: and the United Arab Emirates and Egypt that they will

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Speaker 1: all suspend air and sea travel to and from Qatar.

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Speaker 1: What prompted this action? Now, I mean, did did President

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Speaker 1: Trump's visit to the Middle East have anything to do

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Speaker 1: with us? Was in part that UM. Probably there was

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Speaker 1: there was a bit of a link or that, because

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Speaker 1: I think that the Saudia authorities have felt more UH

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Speaker 1: in a stronger position of the after the Trump bus

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Speaker 1: it UH to take a more um aggressive for or

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Speaker 1: or or a more confrontational stanza towards towards Catar. There

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Speaker 1: were also some comments carry by Katari stay home media

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Speaker 1: and attributed to the mere Um criticizing the Saudist authorities

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Speaker 1: during the Trump bus. It very quickly those comments were

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Speaker 1: deleted from Catari media and and the catarists they said

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Speaker 1: that those those were not real comments, that they were

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Speaker 1: the work of a hacker, but very few people believed

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Speaker 1: that explanation in Saudi Arabia. So really a couple of

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Speaker 1: events after the Saudi the Trump busy to to Saudi

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Speaker 1: Arabia really triggered this crisis. So let's talk about the

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Speaker 1: market effects here, because the initial effect was the crude

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Speaker 1: values rose as sensibly from the expectation the Catard be

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Speaker 1: unable to ship as much crude and therefore that it

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Speaker 1: would cramp supply to some degree, that gain has been

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Speaker 1: absolutely raised. And then some what's going on here? Well, uh,

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Speaker 1: it's it's a very classic um spike in the oil

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Speaker 1: market when we have some kind of geopolitical noise um

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Speaker 1: during trading hours in Asia, the media reaction is used

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Speaker 1: to buy by futures using case something really goes really bad,

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Speaker 1: but immediately has become very clear today that the oil

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Speaker 1: is continuing flowing from Qatar as our six hundred excuse me,

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Speaker 1: six hundred thousand barrels a day UM, and the same

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Speaker 1: with the l n G, which is a much much

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Speaker 1: more significant proportion of global supplies. So at the moment,

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Speaker 1: I don't see any significant impact in the oil market

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Speaker 1: unless this crisis really escalates, We're gonna leave it there,

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Speaker 1: but boy, this is going to be a story that continues.

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Speaker 1: And also you have the issues of whether the Opeque

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Speaker 1: nations are mindful and stick to their limits in terms

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Speaker 1: of production, and because that was something that also is

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Speaker 1: looking to be renewed well, and this also crazes the

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Speaker 1: question what are the standards for some of these Middle

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Speaker 1: Eastern nations to sanction each other or not. I mean,

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Speaker 1: it sort of seems a little bit out of the blue.

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Speaker 1: Um cutting ties with a country that hosts an air

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Speaker 1: base that has more than ten tho U s personnel,

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Speaker 1: what can you say, I want to now bring in

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Speaker 1: George Ferguson, our aerospace defense expert when it comes to

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Speaker 1: Bloomberg Intelligence. Uh, Georgia wanted you to give us just

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Speaker 1: perhaps a preview of what you understand the President may

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Speaker 1: be speaking about in just a few moments having to

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Speaker 1: do with privatization of the air traffic control system. Hey m,

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Speaker 1: good morning. Yeah, we had we expect the President to

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Speaker 1: announce something of a privatization of air traffic control, a

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Speaker 1: structure that's going to look pretty similar to nav Canada.

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Speaker 1: And essentially what it would do is, um create a

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Speaker 1: separate entity that's probably gonna that's supposed to be removed

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Speaker 1: from government bureaucracy to oversee both the day to day

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Speaker 1: air traffic control as well as long term investment in

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Speaker 1: that in the systems that support air traffic control. So, um,

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Speaker 1: you know, we've we've heard that President Trump is laying

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Speaker 1: at his vision, but it's going to include a separation

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Speaker 1: of air traffic control operations from the Federal Aviation Administration.

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Speaker 1: What's the biggest opposition to this? You know, I think

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Speaker 1: that um, I don't know that there's a huge amount

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Speaker 1: of opposition here. I think that there is a bunch

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Speaker 1: of jockeying between the interested parties about who's going to

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Speaker 1: pay in the future. Um. And for the interested parties,

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Speaker 1: let's get a sense of of sort of who's on

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Speaker 1: what side here? Sure, so interest party is going to

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Speaker 1: be airlines, of course, would be the most interesting party

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Speaker 1: because they're most affected by air traffic control, But other

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Speaker 1: users of airspace are going to be business aviation and

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Speaker 1: general aviation, and so I think those three parties are

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Speaker 1: trying to figure out who's going to pay. I think

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Speaker 1: they all would probably agree that they want this air

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Speaker 1: traffic control system out of the federal government because they're

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Speaker 1: their modernization efforts that I think all of them would

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Speaker 1: agree should have happened by now are going too slowly

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Speaker 1: or risk of not occurring the way they thought they

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Speaker 1: would occur. Um. So again, I think what we have

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Speaker 1: is a discussion about, Okay, what's the right fee for

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Speaker 1: the business aviation community do you pay? What's the right

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Speaker 1: fee level for the airlines to pay? And then g

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Speaker 1: a sort of general aviation is in the mix too,

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Speaker 1: but much less of a user. George, I want to

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Speaker 1: know is is the air traffic control system in the

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Speaker 1: United States? Is it considered world class. No, not now.

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Speaker 1: So if you talk to some people, you know, talk

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Speaker 1: to some people at different groups indeed see that advocacy groups,

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Speaker 1: and they'll tell you that, you know, they're still using

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Speaker 1: paper strips with airplane numbers on it, uh, you know,

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Speaker 1: to line up airplanes for approach and departure at major airports. Um.

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Speaker 1: Some of the computing systems are fifty years old. UM.

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Speaker 1: So that's clearly not state of the art. And meanwhile

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Speaker 1: technology is evolved so that we can get a lot

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Speaker 1: better information on each individual airplane. Instead of using radar,

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Speaker 1: which we use now, we can have them uh collect

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Speaker 1: information on their speed and their exact location from GPS

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Speaker 1: signals and then shoot that down to ground stations or

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Speaker 1: even back up to satellites and provide air traffic controls

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Speaker 1: of the much better picture of uh, the air traffic environment.

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Speaker 1: And they can use that to space airplanes much closer

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Speaker 1: and make make the system a lot more efficient. UM

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Speaker 1: So that's sort of where we want to go. We're

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Speaker 1: not there yet. We're still using radar and fifty year

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Speaker 1: old technology computing technology. George do a sense of how

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Speaker 1: much it would cost to bring the US aviation system

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Speaker 1: up to speed. Um. So, look, I think nobody really

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Speaker 1: knows this number correctly. I'll tell you that the f

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Speaker 1: a A says it's a thirty billion dollar number, and

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Speaker 1: they think that roughly thirty million. They think fifteen billion

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Speaker 1: of that is it is something the f a A

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Speaker 1: has to spend. Any other fifteen billion of that would

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Speaker 1: be equipment in the airplane to the airplanes need this

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Speaker 1: equipment to shootout the signal that tells their direction, their speed,

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Speaker 1: their exact location, things like that and the Sorry, now

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Speaker 1: I'm struck by the idea that it probably could save

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Speaker 1: airlines money. No. I mean, basically, if things were more streamlined,

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Speaker 1: they wouldn't have the delays, they wouldn't have to do

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Speaker 1: the vouchers as much to compensate people who have gotten

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Speaker 1: bumped in, uh you know, off of really crowded planes

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Speaker 1: because of delays. I mean, it seems like it would

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Speaker 1: actually save money and there could be some way of

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Speaker 1: you know, expediting this money saving aspect it. And so

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Speaker 1: the airlines are they're the ones that have absolutely showed

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Speaker 1: their cards. They're absolutely in favor of this privatization. If

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Speaker 1: you look at some of their organizations like airlines for America,

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Speaker 1: which is the group organization that represents them. UM. They've

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Speaker 1: got papers out where they're absolutely in favor of getting

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Speaker 1: air traffic control out of the federal government and into

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Speaker 1: sort of a semi private organization. George, is there any

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Speaker 1: is there any precedent for doing this? Uh So, internationally,

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Speaker 1: we do have some precedents for I think one of

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Speaker 1: the more prominent ones is UM is NAV Canada. UH.

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Speaker 1: You know, if a NAV Canada was spun out of

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Speaker 1: the federal government UM airline. Actually, airspace users, including the

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Speaker 1: majority funded by the airlines, pay the fees UH for

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Speaker 1: air traffic control, and Canada they issue bonds to buy

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Speaker 1: you know, UH, capital equipment for long term investment, and

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Speaker 1: they pay those bonds off with excess user fees, and

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Speaker 1: and they're in a situation now where they're actually lowering sees.

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Speaker 1: So it seems like in Canada UM this type of

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Speaker 1: system has been quite effective. I think the airlines are

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Speaker 1: looking at that thinking they'd love to have that. You know, Georgia,

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Speaker 1: I'm surprised that this is not already happening, and I'm wondering,

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Speaker 1: you know, there's been a lot of discussion about the

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Speaker 1: problem with air traffic control in the US. What's being

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Speaker 1: done right now, if anything, to sort of bring it

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Speaker 1: up to speed. Yeah, So the FAA is marching down

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Speaker 1: a m marching down a road to modernized airspace. A

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Speaker 1: lot of it is about this next gen air traffic

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Speaker 1: control and these systems on airplanes that will shoot their

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Speaker 1: um their coordinates to ground stations. UM. So it is

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Speaker 1: being done. Airlines are critical that it's being done slowly. Uh.

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Speaker 1: If you read some of the position papers, they're very

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Speaker 1: concerned that there's not the maybe the project management skills

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Speaker 1: that you might find in a more nim bull private

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Speaker 1: organization inside the f A A. You know, there's concerns

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Speaker 1: about how the FAA funds themselves. They have a they

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Speaker 1: have a six billion dollar trust fund in them and

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Speaker 1: Congress sort of dips into that trust fund to pay

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Speaker 1: for operational costs every year. So maybe there's a lot

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Speaker 1: of concerned again and met the skill set in f

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Speaker 1: A A kind of about the funding, long term funding,

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Speaker 1: and that's the reason people want to see it out

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Speaker 1: of there. But they are marching down the road trying

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Speaker 1: to try to implement modernization. I just want to follow

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Speaker 1: up on the funding issue that what makes anybody think

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Speaker 1: that the private corporation is going to be more ad

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Speaker 1: child in terms of funding then the government. I thought

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Speaker 1: the funding was at least some members of Congresses that

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Speaker 1: the funding has been held up by Congress and it's

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Speaker 1: been intermittent, so that that's one of the reasons why

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Speaker 1: that big revamp of the air traffic control system has

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Speaker 1: been so sort of caught up in a budgetary no turbulence. Yeah,

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Speaker 1: the thought is to get it away from some of

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Speaker 1: the political influence of Congress, Right, So, uh, Congress sort

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Speaker 1: of always always struggles with that challenge where somebody wants

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Speaker 1: to build done and uh, you know, a congressman from

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Speaker 1: this state of that state wants to improve their small airport,

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Speaker 1: and they try to pull money out of some of

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Speaker 1: these trust funds and such to fix their small problem,

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Speaker 1: which might not be a big, you know, a big

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Speaker 1: issue in the in the broader scheme of things. And

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Speaker 1: so I think the challenge is to get it out

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Speaker 1: of the political um arena so that funding can be

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Speaker 1: set aside and and um and projects prioritized by necessity

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Speaker 1: rather than the political influence. And again, Congress is using

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Speaker 1: what you'd consider sort of long term funds trust fund

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Speaker 1: kind of money to fund operations. Um, you know, you could,

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Speaker 1: you could bring in consultants and perhaps optimize operations, improved

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Speaker 1: computer systems and reduce the cost of operating it. Congress

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Speaker 1: doesn't always have an incentive to do that either. So yeah, George,

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Speaker 1: when you talk about political considerations, I think about what

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Speaker 1: Chan and Pettapeece said just a few moments ago. Chan

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Speaker 1: and Pettipeces our White House correspondent for Bloomberg, and she

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Speaker 1: was talking about all the things that are going on

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Speaker 1: right now, and we are awaiting the president right now.

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Speaker 1: That's right, We are awaiting the president who is expected

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Speaker 1: to make remarks on this air traffic control reform initiative

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Speaker 1: that we're talking about with George Ferguson. George, why is

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Speaker 1: President Trump coming out today with everything going on with

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Speaker 1: infrastructure spending? Although I suppose this could be part of

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Speaker 1: infrastructure spending, uh, you know, with everything that's going on

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Speaker 1: with his travel ban, etcetera, with tax reform, um, why

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Speaker 1: why now is there something in particular that he is addressing.

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Speaker 1: I mean, I think this is just part of his

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Speaker 1: broader agenda. You know, maybe he said if a structure

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Speaker 1: was going to be an important part. You know what

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Speaker 1: we heard. I heard airline executives talking about this um

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Speaker 1: right after the election, and even before he had made

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Speaker 1: it to the White House. You know, he that she

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Speaker 1: got installed as president about this being a priority. So, uh,

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Speaker 1: it's been on his agenda. I think he's bringing it

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Speaker 1: forward now. I mean, whether there's some timing around other

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Speaker 1: news in the world that he's trying to distract from.

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Speaker 1: I'll let Shannon sort of answer those questions. But I

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Speaker 1: think that there's always been part of his agenda, and

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Speaker 1: so maybe he also thinks this is a bit uh costless,

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Speaker 1: you can get it done quicker um and sort of

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Speaker 1: get his agenda and moving that way. But maybe some

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Speaker 1: of that sort of thought process there too. George. While

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Speaker 1: we have you, though, I want to ask you something

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Speaker 1: about the industry, because I know you put out some

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Speaker 1: original research today and I wonder if you could tell

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Speaker 1: us about production rates and how each of the individual companies,

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Speaker 1: whether it's the Boeing but there's seven three seven, whether

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Speaker 1: you know a ye Neo, if you could just give

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Speaker 1: us an update on that. Yeah, So from the air

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Speaker 1: framers PIM, we are we are bowling an airbus being

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Speaker 1: the largest two manufacturers of commercial airplanes in the world.

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Speaker 1: They're both ramping up production of the seven, their narrow

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Speaker 1: body airplanes, which are their most important, most profitable airplanes,

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Speaker 1: which is good stuff for them long term. Uh. You know,

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Speaker 1: we're gonna be at production rates that I think they're

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Speaker 1: going to be around fifty for each company. UM the UH. Again,

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Speaker 1: these are sort of the the prime money maker airplanes

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Speaker 1: for these companies. UH, And so longer term it's very

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Speaker 1: good news for their profitability and their cash flow. The

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Speaker 1: challenge is short term that these are new versions of

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Speaker 1: these airplanes that they're they're introducing as they ramp up

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Speaker 1: there and the seven thirty seven Max. So there's some

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Speaker 1: costs to the UH, to the learning curve of building

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Speaker 1: those airplanes. So we'll watch that. That probably hurts them

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Speaker 1: a little bit to the end of this year. But

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Speaker 1: again as they get those the productions of those airplanes down,

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Speaker 1: UM not out to help their profitability cash flow. And

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Speaker 1: what we're watching in these companies right now is wide

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Speaker 1: body demand. I'm seeing some rumors out today that Airbus

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Speaker 1: may even cut production of the A three eight more.

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Speaker 1: UM that airplane hasn't sold well, it's the biggest airplane

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Speaker 1: in the world. It's a real challenge to get it

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Speaker 1: into markets, you know, into into an Airport's all of

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Speaker 1: those tickets and flying to a single airport not a

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Speaker 1: dilute the price you sell your tickets for to fill

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Speaker 1: the airplane. So it's not surprising we're getting ready to

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Speaker 1: go into Farnborough air shows. So we're gonna watch those

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Speaker 1: wide body owners closely, especially three eight. But the other

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Speaker 1: two wide buddies are having challenges are the three thirty

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Speaker 1: and the Triple seven, the three thirty from Airbus and

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Speaker 1: the Triple seven from Boeing. Generally we're seeing, um, we're

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Speaker 1: seeing weakness and long haul ticket prices for overseas travel

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00:25:45,480 --> 00:25:49,040
Speaker 1: ticket prices, and that means that airlines and less stores

436
00:25:49,080 --> 00:25:53,480
Speaker 1: are less excited about taking the newest long haul airplanes.

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00:25:54,280 --> 00:25:55,840
Speaker 1: The Triple seven and the three theory don't have as

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00:25:55,920 --> 00:25:58,159
Speaker 1: much a backlog as some of the new airplanes have

439
00:25:58,240 --> 00:26:02,119
Speaker 1: just been introduced. Uh So we keep watching that wide

440
00:26:02,119 --> 00:26:04,760
Speaker 1: body space and trying to figure out one that's gonna

441
00:26:05,040 --> 00:26:08,119
Speaker 1: when the dynamic dynamic there's going to improve. Thank you

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00:26:08,160 --> 00:26:10,800
Speaker 1: so much, George Ferguson. We really appreciate you giving us

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Speaker 1: the perspective as we await President Trump's comments about air

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00:26:14,760 --> 00:26:18,480
Speaker 1: traffic control reform, which is badly needed in the United States.

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00:26:18,480 --> 00:26:22,360
Speaker 1: George Ferguson is our senior Aerospace, Defense and Airline analyst

446
00:26:22,600 --> 00:26:37,840
Speaker 1: for Bloomberg Intelligence. You know, despite the sell off and

447
00:26:37,960 --> 00:26:40,320
Speaker 1: municipal bonds at the end of last year, they have

448
00:26:40,400 --> 00:26:42,920
Speaker 1: come roaring back, and there is a story on the

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00:26:42,960 --> 00:26:46,600
Speaker 1: Bloomberg today saying that US state and local bonds are

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00:26:46,760 --> 00:26:50,720
Speaker 1: the pricest against treasuries since the recession. How are these

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00:26:50,760 --> 00:26:53,840
Speaker 1: figuring into people's retirement plans? I want to bring in

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00:26:54,000 --> 00:26:58,200
Speaker 1: Marci Sprofits Principle at Boult Donnally and Suprofits consulting Group

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00:26:58,400 --> 00:27:02,320
Speaker 1: in Worcester, Massachusetts, and Marcy, as we talk about President

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00:27:02,320 --> 00:27:05,280
Speaker 1: Trump's tax plan and how people should prepare for retirement,

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00:27:05,720 --> 00:27:08,560
Speaker 1: how much do municipal bonds play into this? Because they

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00:27:08,600 --> 00:27:11,399
Speaker 1: are tax free and they were a popular investment, and

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00:27:11,400 --> 00:27:15,240
Speaker 1: they have been traditionally uh popular investments for wealthy individuals

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00:27:15,280 --> 00:27:18,800
Speaker 1: who want to preserve that tax free benefit over the

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00:27:18,880 --> 00:27:23,600
Speaker 1: long term. Do you think that these investments are still

460
00:27:23,800 --> 00:27:26,439
Speaker 1: warranted because there will not likely be that much of

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00:27:26,440 --> 00:27:32,119
Speaker 1: a change to tax laws. Well, I think with um Obviously,

462
00:27:32,160 --> 00:27:35,040
Speaker 1: with a Republican White House as well as a Republican

463
00:27:35,160 --> 00:27:39,560
Speaker 1: controlled Congress, we are very likely to see some form

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00:27:39,560 --> 00:27:44,240
Speaker 1: of tax reform over the next couple of years. It's

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00:27:44,480 --> 00:27:48,600
Speaker 1: um so it's probably not so much a question of if,

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00:27:49,040 --> 00:27:52,320
Speaker 1: it's a question of when. Uh. We we don't know

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00:27:52,320 --> 00:27:55,440
Speaker 1: what this point, big unknown exactly what that will look

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00:27:55,480 --> 00:28:01,000
Speaker 1: like if um, if the rules are changed in the

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00:28:01,040 --> 00:28:06,600
Speaker 1: way that that would be Trump's calls. His biggest tax

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00:28:06,720 --> 00:28:10,359
Speaker 1: reduction is on the corporate side of things, right, moving

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00:28:10,400 --> 00:28:16,120
Speaker 1: from a rate down to about fifteen pent um. It's

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00:28:16,240 --> 00:28:19,919
Speaker 1: very difficult to tell at this point how his tax

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00:28:20,000 --> 00:28:27,280
Speaker 1: plan will affect individuals because it's very light on specifics. Um,

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00:28:27,359 --> 00:28:30,000
Speaker 1: we don't have much detail there. So he wants to

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00:28:30,040 --> 00:28:32,680
Speaker 1: reduce the number of tax brackets, he wants to raise

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00:28:33,200 --> 00:28:37,960
Speaker 1: the exemptions, he wants to eliminate certain deductions. So it's

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00:28:38,080 --> 00:28:43,640
Speaker 1: very hard to judge without specifics whether people's taxes are

478
00:28:43,640 --> 00:28:47,960
Speaker 1: going to go down so much that municipal bonds wouldn't

479
00:28:48,000 --> 00:28:51,200
Speaker 1: play much of a role. So this this creates kind

480
00:28:51,200 --> 00:28:53,920
Speaker 1: of a problem if you're advising clients, right because you

481
00:28:54,000 --> 00:28:56,080
Speaker 1: have to have long term planning and if there's a

482
00:28:56,120 --> 00:28:58,080
Speaker 1: high likelihood that there will be some kind of tax

483
00:28:58,120 --> 00:29:02,240
Speaker 1: reform which will probably change the investing dynamic for wealthier

484
00:29:02,280 --> 00:29:05,080
Speaker 1: individuals or anyone who's planning for retirement. How do you

485
00:29:05,440 --> 00:29:09,400
Speaker 1: come up with and some advice. Well, that's a very

486
00:29:09,480 --> 00:29:13,520
Speaker 1: good question, Lisa. It's very hard to plan in in

487
00:29:13,520 --> 00:29:18,120
Speaker 1: this environment. UH, specifically as it relates to municipal bonds.

488
00:29:18,160 --> 00:29:23,840
Speaker 1: I do think for the average well off investors there's

489
00:29:23,840 --> 00:29:26,200
Speaker 1: still going to be a place for that. I think

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00:29:26,240 --> 00:29:30,080
Speaker 1: the bigger issue we see with tax or form is

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00:29:30,160 --> 00:29:35,960
Speaker 1: how the changes might affect UH Middle America. Because of

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00:29:36,120 --> 00:29:39,160
Speaker 1: possible changes to I ras and four oh one keys

493
00:29:39,840 --> 00:29:42,880
Speaker 1: and the tax preferences that they have, there's gonna be

494
00:29:43,040 --> 00:29:47,520
Speaker 1: some way to pay for the major tax cuts that

495
00:29:47,560 --> 00:29:52,840
Speaker 1: Trump wants for corporations and retirement plans tend to be

496
00:29:52,880 --> 00:29:56,840
Speaker 1: a big juicy target there because of their current tax

497
00:29:56,880 --> 00:30:00,400
Speaker 1: preferences and because of the way the government co currently

498
00:30:00,560 --> 00:30:04,040
Speaker 1: scores revenue, they only look at a ten year period.

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00:30:04,280 --> 00:30:05,680
Speaker 1: Hold on a second, Does this mean that you think

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00:30:05,680 --> 00:30:08,440
Speaker 1: that they're probably will be some kind of increase to

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00:30:08,440 --> 00:30:11,520
Speaker 1: the amount that the raw fires and the furrow one

502
00:30:11,560 --> 00:30:17,840
Speaker 1: ks are taxed? Um? No, that that's that's not exactly

503
00:30:17,840 --> 00:30:21,760
Speaker 1: what I'm saying, but there have been suggestions that the

504
00:30:21,920 --> 00:30:26,000
Speaker 1: limits on contributions perhaps be cut back to help pay

505
00:30:26,160 --> 00:30:31,800
Speaker 1: for corporate tax reductions. That have been suggestions that instead

506
00:30:31,800 --> 00:30:35,200
Speaker 1: of allowing people to contribute on a pre tax basis,

507
00:30:36,080 --> 00:30:40,520
Speaker 1: that they only contribute on an after tax wrath basis,

508
00:30:40,560 --> 00:30:46,560
Speaker 1: because today that increases revenue and allows the government scoring

509
00:30:46,880 --> 00:30:50,240
Speaker 1: which only looks at a ten year period, to pay

510
00:30:50,280 --> 00:30:55,000
Speaker 1: for the corporate tax cuts. That's our concern. Marcy. I

511
00:30:55,040 --> 00:30:59,480
Speaker 1: know that you've done a work for the American Association.

512
00:30:59,600 --> 00:31:02,560
Speaker 1: You've t to find before converse about the fiduciary rule

513
00:31:02,640 --> 00:31:05,960
Speaker 1: and so on, what is the most pressing issue that

514
00:31:06,000 --> 00:31:08,960
Speaker 1: you would like to bring to the attention of the industry,

515
00:31:08,960 --> 00:31:14,240
Speaker 1: whether it's rollovers, whether it whatever that you feel h strongly,

516
00:31:14,280 --> 00:31:16,800
Speaker 1: because sometimes you just can only get one thing in

517
00:31:16,880 --> 00:31:19,440
Speaker 1: people's minds and get everyone behind. What would that be

518
00:31:19,720 --> 00:31:24,000
Speaker 1: Are you talking specifically regarding the fiduciary It could be

519
00:31:24,040 --> 00:31:26,680
Speaker 1: anything in your in your particular industry, because you kind

520
00:31:26,680 --> 00:31:31,880
Speaker 1: of have a broad understanding of it. Um well, looking

521
00:31:31,920 --> 00:31:35,200
Speaker 1: at the fiduciary rules, I think a lot of people

522
00:31:35,240 --> 00:31:38,880
Speaker 1: are very much in agreement with the concept do everything

523
00:31:38,880 --> 00:31:41,160
Speaker 1: in the best interests of the client. I think the

524
00:31:41,200 --> 00:31:45,680
Speaker 1: problem lies in the execution because the way those rules

525
00:31:45,720 --> 00:31:50,000
Speaker 1: were written, the oversight is in the plaintiff attorney's hands

526
00:31:51,480 --> 00:31:54,120
Speaker 1: and UH and that's something we would certainly like to

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00:31:54,160 --> 00:32:01,400
Speaker 1: see changed. On the tax reform front, we that most

528
00:32:01,480 --> 00:32:08,520
Speaker 1: members of Congress can um understand that the retirement tax

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00:32:08,680 --> 00:32:13,560
Speaker 1: preferences are permanent deductions. The way mortgage interest is that

530
00:32:13,560 --> 00:32:16,920
Speaker 1: that money comes back into the system when people take

531
00:32:16,960 --> 00:32:19,680
Speaker 1: their money out of retirement plans. It's taxable at that point.

532
00:32:20,200 --> 00:32:23,240
Speaker 1: It's just the government scoring doesn't look at it that way.

533
00:32:23,280 --> 00:32:25,560
Speaker 1: So those are two things. I know you asked for one,

534
00:32:25,640 --> 00:32:29,120
Speaker 1: but UH, two things that we're really focused on. How

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00:32:29,120 --> 00:32:32,240
Speaker 1: are you advising clients at a time of pretty low

536
00:32:32,280 --> 00:32:36,040
Speaker 1: interest rates across the board when you do have an

537
00:32:36,080 --> 00:32:38,840
Speaker 1: increasing number certainly have pensions going into risk your and

538
00:32:38,920 --> 00:32:41,880
Speaker 1: risk your assets, and you have investors who you have

539
00:32:42,040 --> 00:32:44,640
Speaker 1: individuals who have to save up bigger and bigger cushions

540
00:32:44,680 --> 00:32:47,480
Speaker 1: for the uh, the the age that they're trying to

541
00:32:47,480 --> 00:32:49,960
Speaker 1: get to to retire, which is getting older and older.

542
00:32:50,280 --> 00:32:52,680
Speaker 1: What do you advise them? What's the biggest you know, UH,

543
00:32:53,160 --> 00:32:55,200
Speaker 1: concern that you have as far as people sort of

544
00:32:55,200 --> 00:32:59,040
Speaker 1: ignoring some of the risks versus uh, the potential rewards. Well,

545
00:32:59,080 --> 00:33:02,080
Speaker 1: I think, as we all know, it's all about the

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00:33:02,200 --> 00:33:06,320
Speaker 1: time horizon. So for young people who are investing for

547
00:33:06,360 --> 00:33:10,640
Speaker 1: retirement today and have a lot of years before they're

548
00:33:10,640 --> 00:33:13,800
Speaker 1: going to actually access that money, they have a lot

549
00:33:13,840 --> 00:33:15,760
Speaker 1: of time to ride those ups and downs. And if

550
00:33:15,800 --> 00:33:18,560
Speaker 1: you look at the market historically, we know that over

551
00:33:18,640 --> 00:33:23,000
Speaker 1: longer periods of time the trend is up right. So

552
00:33:23,240 --> 00:33:28,440
Speaker 1: the people who are much closer to retirement, it's very

553
00:33:28,440 --> 00:33:33,560
Speaker 1: difficult in this low interest rate environment to take out

554
00:33:33,560 --> 00:33:37,240
Speaker 1: a lot of risk and yet get the returns you need.

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00:33:37,840 --> 00:33:39,640
Speaker 1: I want to thank you very much for spending time

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00:33:39,680 --> 00:33:43,960
Speaker 1: with us. Marcy Provitz is the principal at Boulay, Donnelly

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00:33:44,080 --> 00:33:47,520
Speaker 1: and Consulting Group, and they are experts when it comes

558
00:33:47,560 --> 00:33:53,520
Speaker 1: to retirement planning. Thanks for listening to the Bloomberg P

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00:33:53,640 --> 00:33:56,640
Speaker 1: and L podcast. You can subscribe and listen to interviews

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00:33:56,640 --> 00:34:00,720
Speaker 1: at Apple Podcasts, SoundCloud or whatever podcast by from you prefer.

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00:34:01,120 --> 00:34:04,680
Speaker 1: I'm Pim Fox. I'm on Twitter at pim Fox. I'm

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00:34:04,720 --> 00:34:08,120
Speaker 1: on Twitter at Lisa abramowits one before the podcast. You

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00:34:08,120 --> 00:34:10,680
Speaker 1: can always catch us worldwide on Blueberg Radio.